Boris Johnson, the Mayor of London has demanded the best use of land owned by the Greater London Authority (GLA) to construct homes for the long-term private rent sector.
Johnson announced two significant plans for the two GLA-owned sites in Newham, Pontoon Dock and Silvertown Way to construct 700 homes in which one third will be for private rent.
The Mayor is confident that by invoking increased institutional investment in the private rented sector by way of pension funds and insurance companies long term lease for renters will be possible and lend the essential stability to tenants.
London’s unprecedented population growth and skewed housing supply are posing hard challenges to housing and a doubling of numbers can only meet the demand. The Mayor is calling for a radical rethink to build more homes and improve choice for all Londoners.
The Mayor hopes that the entry of institutional investors will improve the stock, quality and service of the rental sector and add a new stimulus to the economy and create more jobs.
Liz Peace, CEO, British Property Federation is on record that such plans to build high-quality, purpose-built homes will augment revenue from rental property in London by at least 8 percent if institutional investors enter the private rented accommodation.
Build-to-rent sector needs long-term private investment and the public encouragement to institutions to housing sector has been appreciated. .
Institutional Investors Bullish
It may be noted that London has only 01 percent of the UK’s private rented housing stock owned by institutions. In rest of the Europe, this is 17 percent (Germany), 23 percent (Switzerland) and 37 percent (Netherlands).
For London’s housing sector, many players are in the fray. They include APG, the Dutch pension manager, M3 Capital Partners, an Anglo-US group and Abu Dhabi Investment Authority.
Insurer Legal & General has made plans to build new towns and regenerate inner-city areas. They will be making 16,000 homes in all. Martin Moore, then chairman of Prudential property arm described institutional investment in London’s private rented sector as a journey from the niche to the mainstream.
A consultant also noted the need for checking the enormous undersupply of affordable rental properties in London. The population growth and rising house prices have made the problem worse and investors have to be called in to meet the demand. The imbalance between demand and supply is at the root cause of all rent chaos.